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New grocers add to already crowded retail scene

ST. LOUIS — The St. Louis retail scene is already crowded, and it’s about to get downright crammed.

Despite the rapidly evolving St. Louis scene, retailer William A. Straub continues to enjoy strong performances from its produce and other departments, said Greg Lehr, produce manager.

“Sales overall have been good,” Lehr said. “There’s a lot of competition coming to town, but we’re not really scared. We just keep doing what we do.”

Among the expected arrivals in St. Louis: two Lucky’s stores, a Fresh Thyme Farmers Market, a Fresh Market and an additional Whole Foods.

That’s a lot of specialty markets for Straub — itself a smaller niche grocer that relies on a loyal clientele — to compete with. To say nothing of upscale niche stores opened in recent years by local retail giants Dierbergs and Schnucks.

But Lehr is confident the chain will continue to thrive.

“There are always options, but it’s not worrisome. We have our niche, the things that make us what we are.”

Still, it’s something of a mystery why so many retailers are trying to make a go of it in St. Louis, Lehr said.

He pointed to other Midwestern cities that were essentially dominated by one anchor chain. In Dierbergs and Schnucks, St. Louis already has two anchors, and the number of smaller players continues to grow.

“St. Louis was once kind of known as the foodservice capital, and now it’s like they’re trying to do the same with retail.”

To compete, some chains with stores in St. Louis wind up selling fresh produce at below cost, Lehr said.

Stores like Straub are benefiting from a trend back toward more personalized stores, Lehr said.

Lehr attended a show sponsored by Caito Foods, a wholesaler partner of Straub, where he heard a keynote speaker, a demographer, touch on themes that resonated with him.

“He said that the age of Wal-Mart is fizzling out. That was baby boomers. Generation Y is switching back to small stores.”

Lehr said he sees that every day, as more young people start shopping at Straub. The appeal is fairly straightforward.

“You don’t have to park a quarter of a mile away from the store and take a half hour to get in and out. People today come in, get their five items, get out. They’re day-to-day shoppers.”

“They’re not dramatically up or down,” Duello said. “There’s a lot of competition, a lot of pressure on pricing. The new stores coming in will make it even more competitive.”

The Lucky’s store opening in west St. Louis County in July, followed by the other imminent openings, has left Duello and other industry veterans in the St. Louis area scratching their heads to a certain extent, given the plethora of retail options that already exists in the region.

“You wonder what the driving force is,” he said.

Fierce Competition

Take specialty retailer The Fresh Market, for example.

“Fresh Market is very good at what they do, but we already have Whole Foods, Schnucks and Dierbergs,” he said, referring to the upscale concept stores opened in west County by his company and St. Louis’s other big traditional player in recent years.

“It will be interesting to see how it all plays out. Whether it will work in St. Louis, I don’t know.”

The entry of more specialty-oriented stores into the marketplace provides another possible avenue of business for the region’s distributors, said Jim Heimos, president of wholesaler George A. Heimos Produce Co. Inc.

“It creates opportunities to support that niche as it grows. Folks may ask for more organics. We’re big in conventional, but we can do more organics as the need arises.”

Independent grocers are thriving in St. Louis, Vaccaro said, and the expected newcomers on the scene aren’t expected to affect his company’s retail business.

“They’re more organic,” he said. “It’s not really something we compete with.”

Current St. Louis retailers and wholesalers don’t yet know the full effect of the new grocers’ plans to move in, said Steve Wielansky, partner in Independent Fruit & Produce.

“A lot of stores are coming in — we’ll see how it impacts,” he said. “There’s quite an abundance already. Schnucks, Dierbergs and Straubs have been here forever. Then Wal-Mart, Aldi and Shop ‘n Save kicked in.”

Dan Pupillo Jr., president of Midwest Best Produce Inc., said his company’s watermelon, tropical and other produce business is tilted heavily toward retail.

Even before the recent news about Lucky’s, Fresh Market and other new players entering the market, St. Louis was a crowded one, Pupillo said.

“St. Louis is getting squeezed with Aldi, Save-A-Lot and Wal-Mart coming in. Everyone’s fighting for a percentage of the customer base. St. Louis has become tough, very competitive.”

In such an environment, it often seems there’s only one winning strategy.

“You have to bet on high volume, small margins to be competitive,” Pupillo said. “The days of the big hits are a thing of the past.”

Sal Pupillo, co-owner of H.R. Bushman & Son, doubts if the entrance of new players on the St. Louis retail scene will affect his company and its focus on produce staples — or Bushman’s retail customers.

“It seems like they make room for them, but it’s a constant battle,” Sal Pupillo said. “But it doesn’t affect us as much you’d think it would. We work with the same chains, and they seem to handle their own territory pretty well. Our business stays pretty stable.”

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About the Author:

Andy Nelson, markets editor

Andy Nelson joined The Packer as a staff writer in 2001. He became the paper's Handling & Distributing editor in 2005 and markets editor in 2006. Before joining Vance, Nelson was a staff writer for The Kansas City Star.